Damper Bay Estates Ltd, a company directed by Craig Heatley and Trevor Farmer, of Auckland, and Mark Taylor, of Queenstown, have applied for resource consent for six houses in the small bay, with a public hearing scheduled for December 13-15.
Although the McRaes support the houses, they have strongly criticised the company's intention of retiring the 163ha site from grazing as unproductive, untidy and a dangerous fire risk.
The Lakes Landcare Group, through spokesman John Aspinall, opposes the development because of similar concerns.
The McRaes are among just a handful of people who support the houses. There are 110 opposers calling for the council to reject the development entirely.
Many have responded to the Upper Clutha Environmental Society's campaign to prevent the buildings going ahead, on grounds they are visually intrusive in an outstanding natural landscape, through which the nationally important Te Araroa Trail passes, and in an area where the community does not want any more residential development.
Mr and Mrs McRae believe the house sites would have a minimal impact on the landscape because of planned enhancement planting.
Retiring the land from grazing would have a far greater effect on the landscape, they said.
Natural regeneration would make it "extremely difficult" to control bracken fern, briars and nodding thistles.
"Look at the roadsides at Damper Bay to see natural regeneration. The area would be a fire danger and haven for rabbits. The land on both sides is pastoral farm land and the regeneration would be an eyesore. We also oppose it as it would take productive land from the New Zealand economy," the McRaes said.
Their son, farmer Duncan McRae, was also "strongly opposed" to retiring the land from grazing, and supported strategic development of the lowland hills and knobs around Damper Bay "where visual and environmental effects will be no more than minor".
The visibility of the house sites from "very short" sections of the Te Araroa Trail would not change the experience for track users, as they would already have passed houses at similar densities to those proposed at Damper Bay.
"Also, you have to remember these buildings are only minutes away from the centre of town. This is not a conservation or national park," Duncan McRae said.
Mr Aspinall said the Lakes Landcare Group did not have a strong view about the houses but was concerned about some aspects of the proposed land management.
"Both the local and New Zealand economy need to maximise our economic return from our natural resources, while maintaining environmental standards. As is currently illustrated, it is possible to maintain production off this land while it remains part of an outstanding landscape. We are strongly opposed to the principle of retiring productive land without good reason," Mr Aspinall said.
The Te Araroa Trust chief executive Geoff Chapple said the trust had "severe reservations" about the development.
"Few places on earth have such water frontages without residential development on the headlands, or without houses presiding over every bay," he said.
The Upper Clutha Tracks Trust neither supports nor opposes the application but has called for more public access as "environmental compensation", should the houses go ahead.
This would include a car park on Mt Aspiring Rd, an easement to the lake along the edge of a paddock, and two short loop walks with links to existing tracks.
It is also seeking easement for two sections of about 200m each, to correct alignments and keep the track out of the lake when it is high. Tourism operator Chris Riley said the houses would be visible from the lake and wanted an archaeological examination because early Maori ovens and moa bones had been found on the site.
The former mayor of Dunedin, Sukhi Turner, and her husband, New Zealand cricket identity Glenn Turner, said there was a "strong and widely held view" against ribbon residential development along the highly valued western shores of Lake Wanaka.
